{"id":215723,"date":"2026-04-30T18:28:35","date_gmt":"2026-04-30T18:28:35","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ny\/215723\/"},"modified":"2026-04-30T18:28:35","modified_gmt":"2026-04-30T18:28:35","slug":"appellate-court-allows-hello-living-nostrand-developer-to-continue-brooklyn-fraud-case","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ny\/215723\/","title":{"rendered":"Appellate Court allows Hello Living Nostrand developer to continue Brooklyn fraud case"},"content":{"rendered":"

A Brooklyn<\/a> appellate court allowed the developer of a troubled Flatbush real estate project to move forward with a suit accusing its financier of predatory lending practices, overruling the defendant\u2019s attempt to dismiss.<\/p>\n

Private equity firm Madison Realty Capital purchased the Flatbush-located Hello Living Nostrand site at 1580 Nostrand Ave. out of bankruptcy from developer Eli Karp, according to the court documents.\u00a0<\/p>\n

Karp had once planned a large apartment complex on the site, but only finished one rental building at 21 East 29th St. Madison Realty Capital took control of the property last year.<\/a><\/p>\n

Eli Karp and his Hello Nostrand development entity claimed in a complaint they filed in 2021 that Madison Realty Capital ran a \u201cloan-to-own\u201d scheme, arguing the lenders set them up to default so they could take over the real estate project.<\/p>\n

Karp sued for fraud, breach of contract, and bad faith dealing. He blamed the lender for fraudulently declaring a default on the Nostrand Avenue building loans after buying the debt on the project and charging default interest, creating a glut of debt that he couldn\u2019t pay down, according to his complaint<\/a>. Madison replied in court filings that Karp defaulted because he had failed to pay his original loan.<\/p>\n

A Brooklyn Supreme Court judge dismissed Karp\u2019s case in 2023, before it had a chance to go to trial, finding that Karp had waived his right to sue as a part of a forbearance agreement he had previously reached with Madison.<\/p>\n

But New York\u2019s Appellate Division, Second Judicial Department, disagreed. It was decided on Wednesday that the Supreme Court should have denied Madison\u2019s attempt to dismiss the Karps\u2019 attempt to recover damages for fraud because releases like the one in the forbearance agreement can be invalidated in cases that involve fraud.<\/p>\n

The judges wrote that Karp had made detailed allegations that Madison Capital had made false representations about providing funding, with the intent of causing Hello Nostrand to default.<\/p>\n

\u201cThese allegations were sufficient to state a cause of action to recover damages for fraud,\u201d the Appellate Court judges wrote in a decision by associate justices Cheryl E. Chambers, Deborah Dowling, James P. McCormack and Susan Quirk.<\/p>\n

Madison Capital Realty and its attorneys did not respond to a request for comment.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"A Brooklyn appellate court allowed the developer of a troubled Flatbush real estate project to move forward with…\n","protected":false},"author":2,"featured_media":215724,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[98,100,99,9,24,63],"class_list":["post-215723","post","type-post","status-publish","format-standard","has-post-thumbnail","category-brooklyn","tag-brooklyn","tag-brooklyn-headlines","tag-brooklyn-news","tag-new-york","tag-new-york-city","tag-nyc"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/215723","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=215723"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/215723\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/215724"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=215723"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=215723"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=215723"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}